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ORGANIZATIONAL MARKETS AND

BUYER BEHAVIOR66CHAPTER

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• Distinguish among industrial, reseller, and government markets.

• Recognize key characteristics of organizational buying that make it different from consumer buying.

AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO:

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• Understand how buying centers and buying situations influence organizational purchasing

• Recognize the growing important of online buying in industrial, reseller, and government markets.

AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO:

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BUYING PAPER IS SERIOUS BUSINESS AT JCPENNEY.

ORGANIZATIONAL MARKETS AND BUYER BEHAVIOR

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• Business marketing

• Organizational buyers

THE NATURE AND SIZE OF ORGANIZATIONAL MARKETS

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• Industrial Markets Industrial firms

• Reseller Market Resellers

• Government Markets Government Units

• Global Organizational Markets

THE NATURE AND SIZE OF ORGANIZATIONAL MARKETS

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• North American Industry Classification System

MEASURING DOMESTIC AND GLOBAL INDUSTRIAL, RESELLER,

AND GOVERNMENT MARKETS

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Concept Check

1. What are the three main types of organizational buyer?

A: Industrial firms, resellers, and government units.

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Concept Check

2. What is the North American industry Classification System (NAICS)?

A: NAICS provides common industry definitions for Canada, Mexico, and the United States, which facilitate the measurement of economic activity in the three member countries of the North American Free Trade Agreement.

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• Demand Characteristics Derived demand

• Size of the Order or Purchase

• Number of Potential Buyers

• Organizational Buying Objectives

CHARACTERISTICS OF ORGANIZATIONAL BUYING

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• Organizational Buying Criteria ISO 9000 Reverse marketing

• Buyer-Seller Relationships and Supply Partnerships

Reciprocity Supply partnership

CHARACTERISTICS OF ORGANIZATIONAL BUYING

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• The Buying Center: A Cross-Functional Group• People in the Buying Center

• Roles in the Buying Center

• Buying Situations and the Buying Center Buy classes

CHARACTERISTICS OF ORGANIZATIONAL BUYING

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Concept Check

1. What one department is almost always represented by a person in the buying center?

A: Purchasing Department

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Concept Check

2. What are the three types of buying situations or buying classes?

A: Straight rebuy, modified rebuy, and new buy

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• Stages in the Organizational Buying Process

Organizational buying behavior

CHARTING THE ORGANZATIONAL BUYING PROCESS

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• Buying a Machine Vision System• Problem Recognition

Make-buy decision

• Information Search Value analysis

CHARTING THE ORGANZATIONAL BUYING PROCESS

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• Buying a Machine Vision System (cont.)• Alternative Evaluation

Bidder’s list

• Purchase Decision

• Postpurchase Behavior

CHARTING THE ORGANZATIONAL BUYING PROCESS

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Concept Check

1. What is a make-buy decision?

A: An evaluation of whether components and assemblies will be purchased from outside suppliers or built by the company itself.

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Concept Check

2. What is a bidder’s list?

A: A list of firms believed to be qualified to supply a given item.

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• Prominence of Online Buying in Organizational Markets

• E-Marketplaces: Virtual Organizational Markets

• Online Auctions in Organizational Markets

ONLINE BUYING IN ORGANIZATIONAL MARKETS

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• Online Auctions in Organizational Markets (cont)

Traditional auction Reverse auction

ONLINE BUYING IN ORGANIZATIONAL MARKETS

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Concept Check

1. What are e-marketplaces?

A: E-marketplaces are online trading communities that bring together buyers and supplier organizations.

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Concept Check

2. In general, which type of online auction creates upward pressure on bid prices and which type creates downward pressure on bid prices?

A: traditional auction, reverse auction.